2023-08-11 10:50:00
XRP, the cryptocurrency used by the payment network Ripple, saw a dramatic rise in price and market capitalization on the Gemini exchange on August 11, 2023. The token went from $0.64 to $50 in minutesbringing its total value to over $2.6 trillion, more than China’s gross domestic product (GDP). This is an unprecedented phenomenon in the history of cryptocurrencies, which has caused surprise and confusion for users and observers.
Origin of the Phenomenon: The Recovery of XRP Trading
According to Gemini, it would be a technical bug linked to the restoration of XRP trading on its platform. Indeed, Gemini had suspended XRP transactions in January 2023, following the lawsuit filed by the US Securities and Exchange Commission (SEC) once morest Ripple Labs, the company that created XRP. The SEC accuses Ripple of illegally selling XRP tokens as unregistered securities.
On August 10, 2023, Gemini announced the resumption of XRP trading on its platform, following Ripple won a partial victory once morest the SEC in federal court in New York. Judge Sarah Netburn rejected the SEC’s request to access Ripple’s internal communications regarding XRP, believing that they were not relevant to determining the legal status of the token.
The next day, Gemini experienced a malfunction that caused price and volume distortions of XRP on its platform. The bug was quickly fixed and Gemini has apologized to affected users. The platform also claimed that it would cancel all irregular transactions and that it would reimburse any losses suffered by traders.
Immediate Consequences and Long-Term Impact
The XRP anomaly on Gemini did not have a significant impact on the overall market cryptocurrencies, because it only lasted only a few minutes and only affected one platform. The price and capitalization of XRP quickly returned to normal around $0.63 and $33.6 billion respectively (at the time of writing this article). However, the event drew attention to the case of XRP, which has been the subject of a legal battle between Ripple and the SEC since December 2020.
The lawsuit between Ripple and the SEC is considered a crucial test for the future of cryptocurrencies in the United States, as it might define the regulatory framework applicable to these digital assets. If the SEC manages to prove that XRP is a security, this might have negative consequences for Ripple and its partners, which should comply with strict capital market rules. On the other hand, if Ripple manages to prove that XRP is a currency or a good, it might open the path to legal recognition and wider adoption of cryptocurrencies in the United States.
Pending the final verdict of the trial, which might take several more months, XRP users and investors should remain vigilant of fluctuations in the price and volume of the token, which may be influenced by legal developments, media announcements or, apparently, technical errors.
Source : CoinDesk, Fx Street, Gemini
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